When the two founders of a company called Botler worked with officials at the Canada Border Services Agency on a chatbot project, they were surprised to learn later that the contract for their work was issued to a company they had never heard of.
Amir Morv and Ritika Dutt complained that didn’t make sense.
But through the many hours of testimony at the parliamentary committee investigating the ArriveCan app, it is clear that’s not unusual. It’s the way government IT contracting works.
MPs at the government operations committee are looking into the ballooning costs of ArriveCan and why $11-million of that went to a two-person company, GCStrategies, that charged 15-per-cent to 30-per-cent commissions but subcontracted all the work to others.
Unanswered questions have been raised, there have been reports about falsified records, officials accusing each other of lying, and allegations related to another, separate project – Botler’s – in what Conservative MP Garnett Genuis calls “a whole family of scandals.”
Yet one big answer has been hiding in plain sight through these hearings. The system for contracting IT work has evolved into a system to defeat the safeguards in IT contracting. As Democracy Watch co-founder Duff Conacher stated after a hearing in October, “the system is the scandal.”
The GCStrategies contract for ArriveCan might be seen as a pandemic exception since the contract was issued without bids because of the rush. But the Botler project – a separate, second deal now being examined in the hearings – wasn’t a pandemic emergency.
CBSA officials wanted Botler to do some initial work, worth less than $500,000, to see if its chatbot would work for the agency.
But CBSA didn’t just issue a contract for that. Officials don’t ask for a contract to be issued every time they need a piece of IT work. That takes months, perhaps even a year. It’s not practical.
The contracting system is onerous. There are many rules created out of the demand for transparency and fairness. Competition should be held among bidders.
When a government department needs work done repeatedly, it typically has bidders compete for a standing offer. Officials can then call up orders over and over again.
That’s simple enough if one is ordering paper. But information technology can be a wide variety of things. And broad “omnibus” standing offers can be used for a lot of things.
Officials don’t hide this. To them, it’s necessary.
Chief technology officer denies threats over ArriveCan, says he didn’t choose contractor
At a Nov. 7 committee hearing, Cameron MacDonald, an assistant deputy minister at Health Canada who was CBSA’s director-general of innovation when ArriveCan was started, talked about how at first, his team didn’t have its own contract, so it had to “borrow” contracts from others – meaning it had to get work done via that contractor.
Eventually, in 2019, Mr. MacDonald’s group got its own $21-million “omnibus” contract with two companies that work as a joint venture, Dalian and Coradix. When CBSA wanted to work with Botler, it went through Dalian/Coradix – and those companies took a cut.
To get work done, the government had to go through a “qualified” contractor. Sometimes, all the work is done by somebody else. A prime contractor can recruit IT workers, or subcontract to other companies. In Botler’s case, the CBSA wanted its work, but had to order from Dalian/Coradix.
This system makes winning the standing offer, not providing the service, the real money-making proposition. If you win an omnibus contract, you own valuable real estate, like Park Place on the Monopoly board, and you can charge rent when it is used. It sure looks like what economists call “rent-seeking behaviour.”
In effect, government departments pay middlemen to do what they can’t: They can’t hire companies – or individuals, for that matter – in a reasonable period of time. Prime contractors help them get around that.
The irony is that this has evolved into a system that follows all the rules but defeats the whole purpose of them.
Botler didn’t compete for work, but the contract was, by the government’s reckoning, provided by competition. As far as the government is concerned, it didn’t do business with Botler. The public won’t find its name on a contract. Transparency has been foiled.
The system has evolved into a way to beat the system. That’s why the middlemen are making so much money.